The China syndrome

A cautionary headline. If there is one lesson to be learned from a study of capitalism, it is that competition eventually finds a way of breaking through. Super profits do not go on forever. And while that day of reckoning may still be a long way off for Australia’s iron ore and coal industries, this headline from this morning’s China Daily should be seen as a salutary reminder.

The story quotes Chinese industry leaders saying rising domestic iron ore production and slowing steel demand have hit some foreign miners. China’s iron ore imports dropped for the third straight month to 47.2 million tons in June, while spot prices have dropped to about $122 per ton after peaking at $185 per ton in April.

Not that the Australian industry giant Rio Tinto seems to have any immediate concerns about the future of the iron ore market. It announced overnight that it is to invest a further $US790 million in its drive to expand the annual capacity of iron ore operations in the Pilbara to 330 million tonnes with the current annual capacity its Port Lambert loading facility going from 80 million tonnes to 180 million tonnes by 2016.

Figures on international trade from the Australian Bureau of Statistics this morning show that notwithstanding any supposed Chinese decline in their imports that the local exporters are having a boom time.

The increased prices for iron ore and the extra tonnages of coal resulted in the June trade surplus swelling to $A3.54 billion ($3.2 billion) from a revised $A1.83 billion in May.

Caught up in some Indian games. The Melbourne-based company Sports Marketing And Management (SMAM) is finding itself caught up in the growing criticism in India of the planning for the Delhi Commonwealth Games. With doubts being raised about whether facilities will be ready for the beginning of contests on October 3, the Indian Government’s Enforcement Directorate, a body charged with combating unlawful foreign currency transactions and money laundering, reportedly has SMAM under scrutiny.

After the Times of India reported yesterday that an initial probe by the Enforcement Directorate revealed that SMAM has so far failed to get any advertisements, besides those pledged by Indian government instrumentalities, the Australian company issued a statement saying “SMAM has always operated in full conformity with applicable laws and regulations and any insinuation about inappropriate or unlawful activities is completely unfounded and without substance”.

The paper returned to the subject this morning.

With the Games degenerating into “contractor wealth games” and details of under-the-table deals triggering public outrage, the Economic Times reported that the governing Congress Party on Tuesday attempted to distance itself from its MP and the chairman of the organising committee, Suresh Kalmadi.

Although the unease in the government is growing over the way the organising committee has been cutting deals, there is recognition that an intervention at this late stage may not be practical. But the government leadership on Tuesday dropped clear hints that it would go after those who made a fast buck from the sports event. They also said that it would strengthen the government’s resolve to cleanse the various sports association of politicians. As many as 17 sports bodies in the country are headed by politicos.

Russians learning about warmth. Some interesting excerpts from Weather Underground’s wunderground blog

At 4pm local time on 30 July in Moscow, Russia, the temperature surpassed 100°F for the first time in recorded history. The high temperature of 100.8°F (37.8°C) recorded at the Moscow Observatory, the official weather location for Moscow, beat Moscow’s previous record of 99.5°F (37.5°C), set just three days ago, on July 26. Prior to 2010, Moscow’s hottest temperature of all-time was 36.6°C (98.2°F), set in August, 1920. Records in Moscow go back to 1879.

On August 1, Ukraine tied its record for hottest temperature in its history when the mercury hit 41.3°C (106.3°F) at Lukhansk. The Ukraine also reached 41.3°C on July 20 and 21, 2007, at Voznesensk. Sixteen of 225 nations on Earth have set extreme highest temperature in history records this year, the most of any year. The year 2007 is in second place, with fifteen such records.

None of the 303 major U.S. cities listed in the records section of Chris Burt’s book Extreme Weather has set a coldest month in history record since 1994 (these 303 cites were selected to represent a broad spectrum of U.S. climate zones, are not all big cities, have a good range of elevations, and in most cases have data going back to the 1880s.) There were just three such records (1% of the 303 major U.S. cities) set in the past twenty years, 1991 – 2010. In contrast, 97 out of 303 major U.S. cities (32%) set records for their warmest month in history during the past twenty years. It is much harder to set a coldest month in history record than a coldest day in history record in a warming climate, since it requires cold for an extended period of time — not just a sudden extreme cold snap.

The Russian government, it seems, is at last beginning to think there might be such a thing as global warming. Last year, reports Time magazine, Russian President Dmitri Medvedev announced that his country, the world’s third largest polluter after China and the US, would be spewing 30% more planet-warming gases into the atmosphere by 2020. “We will not cut our development potential,” he said during the summer of 2009 (an unusually mild one), just a few months before attending the Copenhagen climate summit.

At a meeting of international sporting officials in Moscow on July 30 this year, President Medvedev announced that in 14 regions of Russia it was quite a different story “practically everything is burning. The weather is anomalously hot.”

Then, as TV cameras zoomed in on the perspiration shining on his forehead, Medvedev announced, “What’s happening with the planet’s climate right now needs to be a wake-up call to all of us, meaning all heads of state, all heads of social organisations, in order to take a more energetic approach to countering the global changes to the climate.”

Meanwhile, back in Australia, the leaders of our two major political parties out on the campaign trail continue to speak and act as if there is no hurry to take a “more energetic approach.” Perhaps we need a good heatwave to concentrate their minds but the evidence should be clear enough without one. Here is a Bureau of Meteorology map showing the 12 monthly mean temperature anomaly for Australia.

There’s not one part of the country where temperatures have not been above the long-term average.